Oversight of contractors working on projects for the Los Angeles Unified School District who had potential conflicts of interest was not as rigorous as it should have been, according to a recently released audit.
City Controller Wendy Greuel issued a report Oct. 27 that found that over a four-year period, the school district’s policies and supervision of the selection of private contractors was lacking adequate protocols for preventing conflicts of interests.
The results of the audit come six months after the indictment of a private contractor, Bassam Raslan, who stands accused of steering LAUSD contracts to construction firms he co-owns.
The audit also found that conditions on evaluating outside contractors improved beginning in 2006 until the present.
“While we found some potential conflicts of interest during an earlier era at the district, it appears that the LAUSD under its current leadership has made significant progress in reforming the process for awarding construction projects,” Greuel said. “The district still has room for improvement, but they appear to be on the right path.”
The Argonaut contacted LAUSD District 4 board member Steve Zimmer, who represents Venice, Del Rey, Mar Vista and Westchester schools for comment, but he declined to make any statements, saying that he would like to wait until a report is issued by the inspector general.
He was the only member of the board to vote against a contract for Raslan, an LAUSD regional director of new construction, in February, when the school board awarded his company 40 additional contracts that totaled approximately $180 million.
The audit also found at least 80 instances where consultants were hired without any screening.
Raslan was indicted on April 1 on nine counts of conflict of interest by a grand jury. The Public Integrity Unit of Los Angeles County District Attorney Steve Cooley’s office will prosecute the case. Raslan has pleaded not guilty to the charges.
Following the contractor’s indictment, LAUSD Superintendent Ramon Cortines asked Greuel to conduct the audit.
LAUSD officials praised Greuel for her work and focused on the portion of the audit that cast the district in the most favorable light.
“I would like to thank City Controller Wendy Greuel for the commendable job she and her staff did on conducting this comprehensive audit of our facilities department,” Cortines, who is in his last year as superintendent, said. “We are very pleased the results of the audit are generally quite positive.
“In their review, the auditors found consistent compliance with our district’s policies and procedures for retaining contract professionals in place for the past three years, and appropriate and needed controls were in place to avoid potential conflicts of interest.”
Connie Oser, the business representative of the Teamsters, which represents architects and construction managers, claimed that LAUSD has known about the alleged conflicts for at least two years.
“Members of our union have been complaining that they were more qualified to do the work but were not getting the promotions and the jobs,” she said in an April interview. “We noticed that the district was giving contracts to a lot of outside contractors.”
At one Venice school, the leader of a parent group had nothing but good things to say about the job that a team of LAUSD employees has done on an ongoing garden project.
“The LAUSD workers installed our drainage gutters and did all of the demolition work, as well as the soil samples,” said Laura Alice, the president of Westside Boost at Westside Leadership Magnet School. “I’m very surprised and very happy with the work that they have done.”
While she agrees with some of the audit’s findings, Oser feels that it was incomplete.
“Why concentrate on 2002 to 2006, and what makes them think that after 2006 things were so much better?” she asked.
Assistant City Controller Ben Golombek could not be reached for comment regarding Oser’s questions.
Alice credits LAUSD Facilities Manager James Sohn for making her school’s project go forward smoothly. “He has really been amazing,” she said. “I think their work has really been stellar.”
Oser said no one from her organization was contacted by Greuel’s office to give information that she thinks could have been crucial to the investigation.
“This makes me think that they are talking to consultants who might have been hired into senior management positions,” she surmised. “District employees should know who are the contractors who have a conflict of interest.”
The audit also found there were more than 225 instances from 2002-06 where a regional director like Raslan sat on a panel which selected a person employed by their employer, creating a potential conflict of interest, according to the review. There were also four instances where someone participating in a hiring panel stood to receive a direct financial benefit because they selected a contractor from a firm in which they had an investment.
Lawrence Kalbers, the director of the center for accounting ethics, governance and the public interest at Loyola Marymount University, said contractors know that it is unethical to direct contracts to their own firms when employed in the public sector.
“A contractor employed by the city is expected to look out for the interests of the city,” Kalbers told The Argonaut. “If a city contractor is an owner of a firm that might do business with the city, the contractor should not be involved in the decision to hire the firm in which he or she is an owner, and should not review and approve the work of that firm if the firm is awarded a contract.”
Richard Hofmeister, a Westchester architect, said Raslan’s alleged conduct is not common among architects, engineers and other construction-related professionals.
“That’s really getting your hand caught in the cookie jar,” he said. “I’m glad that the audit was done.”
Greuel’s report noted that Southern California voters have approved over $20 billion in bonds over the last 13 years that are overseen by the LAUSD to finance the largest school construction program in the nation.
The city controller’s report recommends that contractors seeking to do business with LAUSD should file a Form 700 (Statement of Economic Interest) when they are hired and when they leave LAUSD employment, not only every April.
The financial disclosure form is the same that all elected state, county and locally elected officeholders and commissioners in California are required by law to complete under the Fair Political Practices Commission.
In addition, it recommends ensuring that newly hired contractors, those who especially are in senior management, are trained on LAUSD’s conflict of interest policies, Form 700 filing requirements and new construction hiring procedures.
The audit focused on systemic problems in LAUSD oversight of contractors. It did not reveal the names or companies.
Oser reiterated that while there were some things in the audit that she believes shed a light on what was transpiring with some contractors at LAUSD, she feels that there could have been more clarity about the years from 2006 until the present.
“The district should always strive for complete accountability,” she said. “(With this audit) there are too many questions left unanswered.”